SOMNATH GUPTA,KOLKATA vs. ACIT, C.C. 2(1), , KOLKATA

The issue raised in ground no.1 is against the order of the ld. CIT (A) upholding the assessment order u/s 144 of the Income-tax Act, 1961 (the Act), de hors any valid notice u/s 143(2) of the Act and therefore, the assessment framed dated 26.04.2021 is void ab initio, ultra virus and ex-facio, null and void. Besides the assessee challenged the assessment framed based on notice issued u/s 143(2) of the Act

The facts in brief are that the assessee filed the return of income on 12.10.2018, declaring total income at ₹66,79,45/-, which was processed u/s 143(1) of the Act. The assessee was covered under survey u/s 133A of the Act on 15.03.2018, during which certain documents were impounded. Accordingly, notice u/s 143(2) and 142(1) of the Act were issued along with questionnaire. Finally, the ld. AO assessed the income at ₹2,81,08,352/- as against the return income of ₹66,79,450/- vide order dated26th April, 2021, passed u/s 144 of the Act.

In the appellate proceedings, the appeal of the assessee was dismissed by the appellate authority confirming all the additions, when the assessee failed to make any submission before the appellate authority. Thus, the ld. CIT (A) decided the appeal on merit but dismissed all the grounds raised by the assessee.

At the outset, the ld. Counsel for the assessee submitted that the assessment framed u/s 144 of the Act dated 26.04.2021, is invalid and ex-facie, null and void as the same is passed in consequence to invalid notice u/s 143(2) of the Act dated 20.09.2019, which is not as per the CBDT Instruction no. F. No. 225/157/2017/ITA-II Dated 23-06-2017 and accordingly, the assessment order passed consequently is void ab initio, ultra virus and nullity in the eyes of law.

The ld. AR vehemently submitted that the notice u/s 143(2) of the Act, does not specify whether it is a limited scrutiny or a complete scrutiny or a compulsory manual scrutiny. The ld. AR submitted that the CBDT has issued specific instruction vide instruction no. F. No.

The ld. DR on the other hand submitted that this is a computer- generated notice and the non-mentioning of the fact of either limited or complete scrutiny or compulsory manual scrutiny would not render the issuance of notice u/s 143(2) of the Act as invalid. Therefore, additional ground raised by the assessee may kindly be dismissed.

After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the notice issued u/s 143(2) of the Act dated 20.09.2019, specifies only computer aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus, the said notice has been issued in violation of the instruction issued by CBDT as noted above. In our opinion, the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceedings would also be invalid. The case of the assessee find support from the decision of the co-ordinate Bench in the case of Tapas Kumar Das Vs. “After hearing the rival contentions and perusing the materials available on record, we find that particularly the notice was issued u/s 143(2) of the Act, a copy of which is available at page no. 25 of the Paper Book. We note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:- ““आमकरअधिनियम 1961 कीिारा 143(2) केअिीििोटिस Notice under section 143(2) of the Income-tax Act, 1961 संवीक्षा (कंप्यूिरआिाररतसंवीक्षाचयि Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेससस, Sir/Madam/ M/s, आपकोसूधचतककयाजाताहैककनििासरणवर्स केपावतीसंख्या 2017-18 269322761301017 केअिुसारआपकेद्वाराटदिांक 30/10/2017 कोदाखिलकीगईआयकरवववरणीकोसंवीक्षाकेललएचुिागयाहै। This is for your kind information that the return of income filed by you for assessment year 2017-18 vide ack, no. 269322761301017 on 30/10/2017 has been selected for Scrutiny. इससंबंिमें, आपकोटदिीक को 2. 16/11/2018 01:00 PM तकसाक्ष्यप्रस्तुतकरिेअथवासाक्ष्यप्रस्तुतकरािेकाअवसरप्रदािककयाजारहाहैजजसपरआपउक्तआयकरवववरणी केसमथसिमेंनिभसरहैं/ रहेंगे। 2. In this regard, an opportunity is being given to you to produce or cause to produce any evidence on which you may like to rely in support of the said return of income by 16/11/2018 at 01:00 PM. उपयुसक्तनिटदसष्िप्रमाण सूचिाकोआपकोऑिलाइिमाध्यमसेइलेक्रॉनिकरूपमें 3. / परअपिेई- Incometaxindiaefiling.gov.in फाईललंगिाताद्वाराप्रस्तुतककयाजािाहै।बादकीनििासरणकायसवाहीभीआयकरववभागकी 'ई-कायसवाही' सुवविाद्वाराकीजायेगी। 'ई-कायसबाही' परएकसंक्षक्षप्तिोिआपकेसंदभसकेललएसंलग्िहै। 3. The evidence/information specified above has to be furnished online electronically through your E-filing account in incometaxindiaefiling.gov.in. Subsequent assessment proceedings shall also be conducted electronically through the 'E-Proceeding' facility of Income-tax Department. A brief note on 'E- Proceeding' is enclosed for your kind reference.

Even, we find merit in the second limb of the argument of the ld. AR that notice u/s 143(2) of the Act dated 20.09.2019, was issued by the ITO, Ward 33(4), Kolkata, which is in violation of pecuniary jurisdiction of the CBDT instruction No.1/2011 (F. No. 187/12/2010- IT(A-1), Dated 31.01.2011. According to the said instruction, the ITO has pecuniary jurisdiction where the income is upto 20 lacs in the Metro Cities and upto 15 lacs in Mofussil areas whereas the DC/AC have jurisdiction above 20 lacs in Metro cities and above 15 lacs in the Mofussil areas. In the present case, the assessee filed the return of income u/s 139(1) of the Act before the ITO 33(4), Kolkata on

In the result, the appeal of the assessee is allowed.